Cutting Costs and Improving Health: Eliminate Subsidies for Unhealthful Products

The Physicians Committee

Cutting Costs and Improving Health: Federal Food Policy Reforms Could Save Billions

A Report from the Physicians Committee for Responsible Medicine
July 28, 2011

1. Eliminate Subsidies for Unhealthful Products

An overwhelming body of scientific evidence shows that plant-based foods support good health.1,2 The Dietary Guidelines for Americans and the USDA’s MyPlate diagram emphasize the importance of fruits, vegetables, whole grains, and legumes. Federal agricultural policies are out of sync with these nutritional policies. Through a system of direct and indirect subsidies, the government spends billions of dollars for programs that interfere with efforts to improve America’s diet.  

The following steps would eliminate specific supports for unhealthful products:  

a. Eliminate Direct Payments

Food producers and landowners currently receive annual cash distributions in a direct-payment program set up as part of the 1996 Freedom to Farm Act. These payments are based on the historic use of land and do nothing to favor healthful foods. Rather, the direct payment program makes it more profitable to keep land dedicated to the production of feed grains for livestock, and program restrictions block the growing of vegetables and fruits.  

The cost of the program is approximately $5 billion annually. The elimination of direct payments helps put agricultural policy in sync with health policy, and would be a major savings for taxpayers.  

b. Stop Government Payments for Crop Insurance

Variability in crop yields in the face of changing growing conditions requires that measures be in place for insuring against losses. Most industries have cycles in which profits and costs shift, sometimes dramatically, and they must plan accordingly, with either revenue reserves or insurance.

To the extent that federally funded crop insurance programs favor feed grains for livestock (especially corn and soybeans), they provide a de-facto subsidy for products that are associated with obesity, heart disease, diabetes, and cancer and that are not consumed by all Americans. It is difficult to argue that the burden of these costs should be borne by taxpayers, rather than end users. 

The cost of crop insurance programs was approximately $7.3 billion in 2009, mainly for corn, soybeans, cotton, and wheat. Approximately 80 percent of crop-insurance costs are borne by the U.S. Government. The annual costs are likely to rise, because the cost of insuring a crop increases as crop prices increase, for example, due to demand for crops to produce feed grains and ethanol. 

c. Privatize Farm Clean-Up Programs: Polluters Should Pay

Feed-grain production and concentrated animal feeding operations create wastes that may pollute rivers and streams, and cause pollution of other types.4-9 Government programs have assumed much of the cost of limiting or cleaning up this pollution, becoming a de-facto subsidy for the production of agricultural products. In 2010, the Environmental Quality Incentive Program cost $839 million.  

Some of the rationale for these expenditures comes from the fact that producers may otherwise be under no obligation to clean up the environmental damage they may cause. However, producers raising crops for animal feed or raising livestock under intensive conditions should bear the costs of waste clean-up. At the same time, governmental agencies that oversee environmental protection must have authority to enforce appropriate regulations to ensure a healthful, clean environment.

d. End Government Check-Off Programs

Various “check-off” programs have been established to promote food products. Among the most noteworthy are the dairy promotion programs that have created “milk mustache” advertisements and have contracted with fast-food chains to promote cheese products. There are many others.

These programs are funded by producers. However, they are administered by the U.S. Government, using the force of law to compel even small producers to contribute financially, whether they can afford to or not, and exempting the programs from some of the advertising restrictions that would apply to private entities.

Check-off promotional campaigns have been, in some cases, directly contrary to the government’s own major health and nutrition programs, aggressively promoting foods, such as cheese, that are high in saturated fat and cholesterol. 

The government should have no role in the promotion of unhealthful foods that harm Americans and drive up health care costs. By leaving food advertising and promotion to private industry, the U.S. Government can focus on the genuine issues of the health of the American public.

e. Ban the Use of Antibiotics for Nonmedical Purposes in Animal Feeding Operations

According to the Centers for Disease Control and Prevention, 48 million new cases of foodborne illness occur annually in the U.S.10 Approximately 60 percent of outbreak-associated illnesses originate directly from meat sources (fish, shellfish, beef, pork, or poultry).11 Others originate from animal sources, but travel to humans through an indirect route in which traces of animal manure contaminate plant products.  

The problem of foodborne illness is aggravated by the routine use of antibiotics as growth promoters for livestock. This widespread practice fosters the development of antibiotic-resistant strains that are difficult and expensive to treat, lengthening hospital stays and requiring the use of new, costly antimicrobials. Although this dangerous practice has been opposed by major health authorities, including those within the U.S. Government, efforts to eliminate it have been blocked for political reasons.

The direct cost of treating foodborne illnesses totals approximately $9.5 billion per year in the U.S.12 Limiting the use of antibiotics on farms to animals requiring treatment for active infections would likely slow the production of antibiotic-resistant strains. Moreover, to the extent the previously described measures shift consumption patterns from animal-based foods to plant-based foods, foodborne illnesses and their associated costs are likely to diminish.  

The steps outlined above would eliminate specific supports for unhealthful products. In addition, a change of priorities in food assistance programs will put a new emphasis on health while yielding major financial savings.